UC-NRLF 


Report  on  the  Appraisement  of  Properties  of  the 
San  Jose  Water  Company 


SCALE 


LEGEND 

Lands  ou/nec/  by  San  Jose  Water  Co. 
F/umes       ....  .          . 

Condu/fc     •  • 

/? /par i  an  £?ighfe  owned 'by  SJWCo 

H/a  fer sheaf  L  /rres 


PROPERTIES 
AND  MAIN  CONDUl  TS 


SAN  JOSE  W4TER  CO. 


REPORT 


ON  THE 


Appraisement  of  Properties 


OP   THE 


San  Jose  Water  Company 


San  Jose,   California, 

December  31,  1913 


F.  C.  Herrmann, 

G.  A.  Elliott, 

Engineers 


or  TWF. 


UNIVERSITY 


c*/. 


CONTENTS 

PAGE 

Consumption  of  Water 16 

Construction,  Chronological  Order  of 8 

Conclusions 42 

Description  of  Properties 10 

Depreciation,  Discussion  of 23 

Development  Expense 28 

Financial  Data 17 

Going  Concern 28 

Historical  Outline 7 

Lands,  Value  of 45 

Letter  of  Transmittal 5 

Operation,  Method  of 10 

Overhead  Charges 20 

Pump  Stations 13 

Quality  of  Water 17 

Quality  of  Service 14 

Rainfall,  Los  Gatos  Canyon 35 

Reservoirs,  Supply 10 

Reservoirs,  Distributing 1 1 

Run-Off,  Los  Gatos  Canyon 37 

Saratoga  System 14 

Service  Conditions 14 

Subterranean  Waters 38 

Valuation,  Method  of 20 

Water  Rights 34 

Water  Rights,  Method  of  Valuation 39 

Water  Rights,  Value  of 41 


APPENDIX 

Valuation  of  Real  Estate  and  Rights  of  Way. 

PAGE 

Valuation,  Method  of *. .  43 

Lands,  Value  of 45 

Rights  of  Way,  Value  of 49 

Summary,  Lands  and  Rights  of  Way 51 


285860 


MAPS  AND  DIAGRAMS. 

PAGE 

General  Map  of  System Frontispiece 

Depreciation  Diagram ' 24 

Development  Expense  Diagram 32 

Run-Off,  Los  Gatos  Canyon,  Mass  Diagram 36 


ILLUSTRATIONS. 

PAGE 

Los  Gatos  Canyon 7 

Howell  and  Lake  Ranch  Reservoirs 1 1 

Main  Pump  Station 13 

Seventeenth  Street  Pump  Station 15 

Buena  Vista  Pump  Station 23 

Santa  Cruz  Mountains 35 

Coast  Range 39 


TABLES. 

PAGE 

Consumption 16 

Depreciation,  Straight  Line — Sinking  Fund 26 

Development  Expense 33 

Overhead  Charges,  Percentage 23 

Pressures  in  San  Jose 15 

Rainfall,  Los  Gatos  Canyon 35 

Reservoirs,  Distributing — Capacities  of 1 1 

Revenue  and  Expenditures,  Six  Years 17 

Revenue,  Sources  of 18 

Statistics  for  1912,  General 19 

Valuation  Structural  Property 29 

Valuation,  Total 42 


F.   C.   HERRMANN  G.   A.   ELLIOTT 

HERRMANN    &    ELLIOTT 

Engineers 
San  Francisco,  Cal. 


February  28,  1914 

Joseph  R.  Ryland,  Esq., 

President  San  Jose  Water  Company, 
San  Jose,  California. 

Dear  Sir: 

In  compliance  with  our  arrangement  of  November  25,  l  $13, 
we  are  transmitting  herewith  our  report  upon  the  valuation  of 
the  properties  of  the  San  Jose  Water  Company,  accompanied  by  a 
detailed  appraisal  schedule. 

The  report  is  the  result  of  a  very  careful  investigation  of  the 
extent,  character  and  condition  of  all  of  the  properties  of  the 
Company.  In  the  absence  of  plans  showing  the  arrangement  and 
extent  of  structures,  it  was  necessary  to  maintain  in  addition  to 
the  men  used  in  the  field  inventory,  an  engineering  force  engaged 
in  surveying  and  making  plans  of  structures.  The  present  con- 
dition of  structures  was  given  special  attention  by  the  writers. 
Inasmuch  as  the  values  of  land  upon  which  are  located  the  storage 
reservoirs  of  the  Company  were  inventoried  separately  from  the 
values  of  the  structures  thereon,  the  question  of  service  value  of 
this  land  for  the  purpose  for  which  it  is  used  has  not  been  dis- 
cussed nor  any  value  assigned,  other  than  that  given  by  the  Real 
Estate  Appraisers. 

Respectfully, 

F.  C.  HERRMANN, 

G.  A.  ELLIOTT, 

Engineers. 


o 


APPRAISEMENT  OF  PROPERTIES 

OF  THE 

SAN  JOSE  WATER  COMPANY 


Historical  Outline  of  Development: 

The  San  Jose  Water  Company  was  incorporated  November 
21,  1866,  under  the  laws  of  the  State  of  California,  with  a  capital 
of  $100,000.00.  Up  to  that  date  San  Jose  had  been  supplied  with 
water  pumped  from  a  well  located  at  the  corner  of  First  and  San 
Antonio  streets;  owned  by  Donald  McKenzie.  The  San  Jose  Water 
Company  took  over  the  McKenzie  plant  and  extended  the  service 
to  include  the  suburbs  of  San  Jose,  the  town  of  Los  Gatos  and 
vicinity  and  the  town  of  Santa  Clara.  With  the  exception  of  Santa 
Clara  where  a  municipal  waterworks  was  installed  in  1895,  and 
the  addition  of  Saratoga  and  Alma,  this  is  the  field  covered  today. 

The  capitalization  of  the  Company  at  the  present  time  is 
$1,250,000.00.  Briefly  the  physical  properties  consist  of, 

4047  Acres  of  land  on  Los  Gatos  Creek. 

30  Acres  of  land  on  Coyote  Creek. 

8.5  Acres  of  land  on  Saratoga  Creek. 

Rights  of  Way  and  Lots  in  San  Jose. 

Eleven  reservoirs  of  a  total  capacity  of  over  300  M.  G. 

Miscellaneous   diverting   dams,    flumes   and   conduits   for 

the  collection  of  water. 
Nine  Pumping  Stations,  and  Deep  Wells. 
San  Jose  Distributing  System. 
Los  Gatos  Distributing  System. 
Saratoga  Distributing  System. 
Office  building  property,  Yard,  etc. 
Water  Rights. 

SEVEN 


Chronologically  the  properties  of  the  San  Jose  Water  Com- 
pany were  acquired  or  constructed  as  follows: 

1869.  Agreement  made  with  the  Los  Gatos  Manufac- 
turing Company  to  use  the  water  of  Los  Gatos 
Creek.  Water  rights  on  Los  Gatos  Creek  north 
of  Los  Gatos  purchased  in  this  year  and  1870. 

1870-71.   Three    Mile    and    Seven    Mile    Reservoirs    con- 
structed. 

1871.  Tisdale  Reservoir  near  Los  Gatos  built  in  con- 

junction with  the  Los  Gatos  Manufacturing 
Company.  Jones  Dam  and  Flume  constructed. 

1872.  Seven  Mile  Reservoir  enlarged  and  flume  built 

to  Los  Gatos. 

1874-76.    Lake  Ranch  Reservoir  built. 

1877.  Land  acquired  and  construction  commenced  on 

Upper  Howell  Reservoir.  Water  Rights  of 
Rundell  Creek  purchased.  Part  of  present 
office  building  location  purchased. 

1878.  Upper  Howell  Reservoir  completed. 

1881.  Lower  Howell  Reservoir  constructed. 

1882.  Seven  Mile  Reservoir  enlarged  and  wood  flume 

replaced  in  part  by  concrete. 

1886.  Additional  land  purchased  at  site  of  present  office 

building  and  a  pumping  station  erected. 

1887.  Law  suit  with  Los  Gatos  Manufacturing  Com- 

pany affecting  method  of  diverting  water  com- 
promised. 

Water  rights  and  lands  of  the  Saratoga  and  Licks 
Mill  Paper  Company  at  Saratoga  purchased. 

Howell  Reservoir  enlarged. 

Water  Rights  on  Saratoga  Creek  purchased. 

1888.  Flume   from   Jones   Dam   to   Tisdale   Reservoir 

reconstructed. 

1889.  Dam  at  Lake  Ranch  Reservoir   raised.     Addi- 

tional waters  of  Saratoga  Creek  filed  upon  for 
use  of  Saratoga.  Site  of  Cambrian  Reservoir 
purchased.  One-half  interest  in  "Los  Gatos 
Waterworks"  purchased  from  the  Los  Gatos 
Manufacturing  Company. 

1890.  Cambrian  Reservoir  built. 

EIGHT 


1892.  Land  purchased  on  Los  Gatos  Creek  for  protect- 

tection  of  its  waters.  Ousley  Reservoir  site 
purchased.  Williams  Reservoir  site  purchased. 

1893.  Additional  land  purchased  at  Howell  Reservoir. 

More  land  secured  on  Los  Gatos  and  Cava- 
naugh  Creeks  to  insure  purity  of  the  supply. 

1894.  Site  of  Saratoga  Reservoir  purchased  and  con- 

struction commenced. 

1895.  Santa  Clara  supply  discontinued  owing  to  con- 

struction of  Municipal  Waterworks.  Holly 
Pumps  installed  at  Main  Station.  Additional 
land  for  protection  of  waters  of  Los  Gatos  and 
Cavanaugh  Creeks  purchased.  Construction  of 
concrete  dam  at  Williams  Reservoir  com- 
menced. 

1896.  Construction   of   Main   Pump   building  finished 

and  wells  bored  in  yard.  Coyote  Creek  land 
purchased. 

1897.  Buena  Vista  Pump  Station  land  purchased. 

1898.  Roberts   Springs   Pump   Station   land   was   pur- 

chased and  station  constructed.  Ousley  Reser- 
voir built. 

1899.  Properties  of  Mountain  Spring  Water  Company 

of  Los  Gatos  purchased. 

1901-02.   Williams  Reservoir  concrete  dam  raised.     Addi- 
tional land  on  Los  Gatos  Creek  purchased. 

1903.       Wells  bored  on  Coyote  land. 

1906.  Williams  Reservoir  concrete  dam  raised.  Los 
Gatos  consumers  services  metered.  Buena 
Vista  Steam  Station  built. 

1908.  Seventeenth  Street  Pump  Station  lot  purchased, 

and  one  well  bored. 

1909.  Pipe  line  laid  from  Main  Pump  Station  to  cen- 

tral business  district  of  San  Jose  for  fire  pro- 
tection. Another  well  bored  at  Seventeenth 
Street  Pump  Station. 

1910.  Three  wells  bored  at  Seventeenth   Street  Pump 

Station. 

1911.  Seventeenth    Street    Pump    Station    constructed. 

Well  "A"  bored  at  Main  Pump  Station. 


NINE 


1912.  Steel  bridge  constructed  over  Guadalupe  Creek 

to  carry  fire  line  pipe. 

1913.  Electric  Pumping  Station  built  at  Buena  Vista. 

Three  wells  bored  at  Buena  Vista  Station. 
Electric  Pumping  Station  built  at  Main  Sta- 
tion and  Well  "N"  bored.  Water  rights  of 
Pacific  Gas  and  Electric  Company  on  Los 
Gatos  Creek  purchased.  Tisdale  Electric 
Booster  Pump  built.  Three  Mile  Pumping 
Station  built.  Control  of  San  Jose  Water  Com- 
pany vested  in  State  Railroad  Commission  by 
town  of  San  Jose.  Case  No.  476  of  Monahan 
(Mayor  of  San  Jose)  versus  San  Jose  Water 
Company  in  matter  of  rates  brought  before  State 
Railroad  Commission.  Inventory  and  appraise- 
ment of  properties  of  San  Jose  Water  Com- 
pany begun  by  Herrmann  and  Elliott. 

Description  of  Properties  and  Method  of  Operation: 

The  sources  of  supply  utilized  by  the  San  Jose  Water  Com- 
pany may  be  divided  into  two  classes — surface  and  subterranean, 
these  in  turn  being  subdivided  into  storage  and  run-off  yields  and 
yields  from  infiltration  galleries  and  deep  or  artesian  wells.  As 
will  be  seen,  the  yield  from  one  or  more  of  the  pumping  supplies 
is  frequently  used  to  augment  the  gravity  supply,  and  this  should 
be  borne  in  mind  in  considering  the  system  as  a  whole. 

The  use  of  stored  water  is  resorted  to  only  when  conditions 
are  such  that  the  yield  from  other  sources  is  insufficient  to  meet  the 
consumption,  it  being  held  in  reserve  at  other  times  against  such 
a  contingency.  Water  is  impounded  in  the  following  reservoirs: 

Williams  Reservoir,  situated  near  the  head  waters  of  Los  Gatos 
Creek,  and  having  a  storage  capacity  of  51,173,000  gallons. 

Upper  and  Lower  Hoivell  Reservoirs,  located  at  the  head 
waters  of  Rundell  Gulch,  the  Upper  Reservoir  having  a  capacity 
of  71,938,500  gallons  and  the  Lower  Reservoir  a  capacity  of 
46,477,000  gallons. 

Lake  Ranch  Reservoir,  situated  at  the  head  waters  of  Beards- 
ley  Gulch,  and  having  a  capacity  of  110,070,000  gallons. 

TEN 


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52; 


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The  other  reservoirs  in  the  system  may  be  regarded  as  Distri- 
buting Reservoirs,  though  they  serve  also  as  regulators  and  settling 
basins.  With  their  several  capacities  they  are: 

Ousley  Reservoir   2,428,680  gallons 

Mountain    Spring    Reservoir 4>353>5oo  " 

Tisdale    Reservoir    1,868,950  " 

Seven  Mile  Reservoir 5,629,800  " 

Cambrian   Reservoir    3,385,820 

Three   Mile   Reservoir 3>123>35o  " 

Saratoga   Reservoir    333>°oo  " 

San  Jose  and  Los  Gatos  System: 

In  the  operation  of  the  system  storage  water  from  the  Wil- 
liams Reservoir  is  discharged  into  JLos  Gatos  Creek,  the  channel 
of  which  is  used  as  a  conduit  until  the  Jones  Dam  is  reached.  Jones 
Dam  diverts  this  flow  together  with  the  discharge  from  Rundell 
Gulch,  hereinafter  referred  to,  into  a  conduit  leading  to  the  Tisdale 
Reservoir  in  Los  Gatos. 

This  conduit  consists  in  part  of  a  flume  24"  by  28"  in  cross 
section,  a  portion  of  which  is  constructed  of  wood  and  a  portion  of 
concrete,  the  balance  of  'the  conduit  being  a  pipe  28"  in  diameter. 
Storage  water  from  the  Howell  Reservoirs  reaches  this  conduit  by 
means  of  the  channel  of  Rundell  Gulch  to  its  confluence  with  Los 
Gatos  Creek,  whence  it  is  diverted  by  the  Jones  Dam.  Lake  Ranch 
Reservoir  storage  is  also  conveyed  to  this  conduit  by  means  of  the 
channel  of  Beardslev  Gulch  to  the  lower  Beardsley  Dam,  where  it 
is  diverted  and  conveyed  in  a  12"  pipe  line  to  the  overflow  line 
from  the  Ousley  Reservoir,  thence  to  the  conduit  under  considera- 
tion. 

Besides  conveying  these  storage  waters  this  conduit  performs 
the  function  of  conveying  the  run-off,  directly  and  indirectly,  of 
Cavanaugh  and  Trout  Gulches,  as  well  as  of  such  tributaries  of 
Los  Gatos  Creek  as  empty  into  it  above  the  Jones  Dam.  The  total 
capacity  of  this  conduit  is  about  seven  and  one-half  million  gal- 
lons daily. 

ELEVEN 


Run-off  water  is  collected  in  Cavanaugh  Gulch  by  means  of 
two  diversion  dams,  the  lower  leading  directly  into  a  flume  tribu- 
tary to  the  conduit  above  referred  to  and  the  upper  dam  diverting 
the  flow  into  a  conduit  of  six-inch  and  eight-inch  pipe  leading  to 
the  Ousley  Reservoir.  The  overflow  from  this  reservoir  is  con- 
veyed in  a  twelve-inch  pipe  to  the  above  mentioned  conduit  to  the 
Tisdale  Reservoir. 

Trout  Gulch  run-off  also  reaches  Tisdale  Flume  by  means  of 
a  diversion  dam  and  a  line  of  ten  and  twelve-inch  pipe. 

Run-off  from  Los  Gatos  Creek  and  such  of  its  tributaries  as 
empty  into  it  below  the  Jones  Dam  is  diverted  at  the  Forbes  Dam 
near  Los  Gatos  and  conveyed  through  a  pipe  line  around  Tisdale 
Reservoir  to  the  main  supply  line  to  San  Jose. 

Water  from  the  Ousley  Reservoir  is  gravitated  directly  into 
the  Distributing  System  of  the  City  of  Los  Gatos,  the  surplus  above 
the  daily  use  finally  reaching  the  Mountain  Springs  Reservoir.  It 
can  also  be  used  to  gravitate  water  to  supply  the  Town  of  Alma 
and  its  vicinity,  and  further  to  increase  the  supply  in  the  Moun- 
tain Springs  Reservoir  which  it  feeds  by  gravity.  The  Town  of 
Alma  usually  derives  its  supply  from  the  Upper  Cavanaugh  Dam, 
and  the  Ousley  Reservoir  supply  is  resorted  to  only  when  the  run- 
off from  Cavanaugh  Gulch  is  insufficient  for  this  purpose. 

The  Mountain  Springs  Reservoir  derives  its  supply  from 
Beckwith  Spring  as  a  principal  source.  When  necessary  this  sup- 
ply is  increased  by  an  auxiliary  supply  from  the  Ousley  Reservoir. 
Water  from  Mountain  Springs  Reservoir  is  gravitated  directly  into 
the  Los  Gatos  Distributing  System  and  contiguous  County  pipe 
lines,  pressure  on  all  of  which  can  be  increased  by  the  Almond 
Grove,  Tisdale  and  Hill  Well  Pumping  Stations  acting  as  boost- 
ers. 

Tisdale  Reservoir  is  the  final  distributor  of  the  surface  sup- 
ply. Its  outlet  works  are  so  arranged  that  water  can  be  delivered 
directly  into  the  Los  Gatos  Distributing  System  as  well  as  into  the 
conduit  leading  to  San  Jose.  In  the  latter  case  the  supply  gravi- 

TWELVE 


MAIN    ELECTRIC   PUMP    STATION    EQUIPMENT. 
Capacity,  Twelve  Million  Gallons  Daily. 


MAIN    ELECTRIC   AND    STEAM    PUMP    STATIONS. 
These  Stations  Receive  Their  Supply  from  Subterranean  Gravel  Measures  Eight  Hundred  Eeet  Deep. 


tates  to  Seven  Mile  Reservoir  which  serves  as  a  regulator.  After 
leaving  Seven  Mile  Reservoir  the  water  passes  by  gravity  to  the 
Cambrian  Reservoir,  it  being  arranged  however  to  by-pass  this 
reservoir  when  desired.  From  the  Cambrian  Reservoir  water  is 
carried  in  two  lines  one  of  which  leads  to  the  Three  Mile  Reser- 
voir, the  other  delivering  water  directly  into  the  San  Jose  Dis- 
tributing System,  via  Hamilton  Avenue  and  Willow  Street.  Water 
is  pumped  from  Three  Mile  Reservoir  into  San  Jose  via  Johnson 
Avenue  and  Stevens  Creek  Road. 

Correlated  with  the  supply  reservoirs  and  conduits  are  pump- 
ing plants,  which  furnish  additional  water  from  wells  tapping  the 
extensive  water-bearing  gravels  of  the  Santa  Clara  Valley. 

The  Tisdale  Pump  Station  is  operated  by  electric  power,  and 
has  a  capacity  of  600  gallons  per  minute.  This  station  pumps  from 
Tisdale  Reservoir  into  the  Los  Gatos  System,  and  may  also  be  used 
to  pump  into  the  Mountain  Springs  Reservoir,  using  the  Los  Gatos 
Distributing  System  as  a  conduit  for  this  purpose. 

The  Almond  Grove  Pump  Station  is  operated  by  steam,  and 
has  a  capacity  of  350  gallons  per  minute,  pumping  from  wells 
directly  into  the  Los  Gatos  System. 

The  Hill  Wells  Pump  Station,  a  steam  plant  with  a  capacity 
of  350  gallons  per  minute,  pumps  water  from  wells  either  into  the 
Los  Gatos  System  or  into  the  main  supply  conduit  leading  from 
the  Tisdale  Reservoir  to  San  Jose.  It  is  also  arranged  to  pump 
water  from  the  San  Jose  conduit  directly  into  the  Los  Gatos  Sys- 
tem, and  from  either  of  the  above  sources  through  the  Los  Gatos 
System  into  the  Mountain  Springs  Reservoir.  The  wells  at  this 
station  are  shallow,  and  may  be  regarded  as  an  adaptation  of  infil- 
tration galleries. 

The  Roberts  Pump  Station  is  operated  by  steam,   and  has  a 

capacity  of  300  gallons  per  minute.     It  pumps  from   infiltration 

galleries  at  the  site  of  the  pumps  into  the  San  Jose  supply  conduit. 

The  Three  Mile  Pump  Station  is  electrically  operated,  and  has 

a  capacity  of  1200  gallons  per  minute  against  a  pressure  of  sixty 

THIRTEEN 


pounds,  the  working  pressure  of.,  the  San  Jose  System.  It  pumps 
from  the  Three  Mile  Reservoir  into  the  main  supply  conduit,  the 
water  passing  to  San  Jose  either  via  Johnson  Avenue  or  Hamilton 
Avenue  as  required. 

The  Buena  Vista  Pump  Station  is  equipped  with  both  steam 
and  electrically  operated  pumps,  and  has  a  capacity  of  9000  gal- 
lons per  minute.  Water  is  drawn  from  deep  wells  by  means  of 
small  multiple-stage  turbine  pumps  placed  in  the  well  casings,  dis- 
charging into  a  concrete  tank  from  which  it .  is  pumped  directly 
into  the  Tisdale  Reservoir — San  Jose  conduit. 

The  Main  Pump  Station  located  at  Santa  Clara  Avenue  and 
River  Street  is  a  steam  and  electric  plant  in  separate  units,  having 
a  total  capacity  of  twelve  million  gallons  in  twenty-four  hours. 
Its  supply  is  drawn  from  a  cistern  fed  by  deep  artesian  wells  at  the 
plant,  and  is  pumped  directly  into  the  San  Jose  Distributing  System. 

The  Seventeenth  Street  Pump  Station  is  electrically  operated, 
and  has  a  capacity  of  3000  gallons  per  minute.  It  pumps  from 
deep  artesian  wells  directly  into  the  San  Jose  Distributing  System. 
Water  is  supplied  to  the  pumps  by  small  units  in  the  wells  as  at 
Buena  Vista. 

Saratoga  System: 

Saratoga  is  supplied  from  Campbell  Quito  Creek.  Water  is 
distributed  from  a  small  reservoir  located  west  of  the  town.  This 
reservoir  with  its  conduits  is  a  system  in  itself,  it  having  no  physi- 
cal connection  with  either  the  San  Jose  or  Los  Gatos  Systems. 

Service  Conditions: 

The  character  of  service  in  San  Jose  and  vicinity  is  best  illus- 
trated by  noting,  that  despite  the  fact  that  during  the  past  two 
unusually  dry  years  the  San  Jose  Water  Company  was  called  upon 
to  supply  additional  emergency  consumers  whose  regular  supply 
had  failed,  there  was  not  one  complaint  of  lack  of  water  from  any 
service  connection  to  the  Company's  mains.  During  the  winter 
months  practically  all  the  water  used  is  supplied  from  the  gravity 

FOURTEEN 


INTERIOR   OF   STATION. 


SEVENTEENTH    STREET    PUMP    STATION. 

Receives  Water  from  Wells,  and  Discharges  Into  the  Distributing  System  at  an  Unusually  Favorable 

Location  for  the  Maintenance  of  Excellent  Pressure. 


system.  In  the  summer  season  this  supply  is  necessarily  reinforced 
by  pumping  from  the  deep  water-bearing  gravels  of  the  Santa 
Clara  Valley.  The  pumping  stations  and  capacities  have  been  noted 
before,  but  attention  is  directed  here  to  the  foresight  used  in  the 
location  of  Seventeenth  Street  and  the  Main  Stations,  both  of  which 
are  so  placed  with  respect  to  the  distributing  system  that  any  loss 
of  head  is  compensated  by  their  discharge  at  strategic  points.  These 
stations  pump  directly  into  the  Santa  Clara  Street  main  at  opposite 
sides  of  the  City.  The  congested  business  district  centering  at  Santa 
Clara  and  First  Streets,  lies  directly  between  these  two  stations  and 
is  well  protected  from  fire  hazard  insofar  as  water  is  concerned. 
In  addition  to  the  regular  distributing  mains,  an  independent  fire 
line  leads  directly  from  the  Main  Pumping  Station  to  the  center 
of  the  business  district,  and  is  there  interconnected  with  the  Santa 
Clara  Street  main.  The  distributing  pipe  system  is  of  ample  size 
and  fairly  well  connected  at  intersecting  streets.  A  pressure  of  from 
fifty-five  to  sixty  pounds  is  maintained  at  Santa  Clara  and  River 
Streets,  the  variation  from  this  amounting  to  about  five  pounds  at 
practically  all  points  in  the  system.  Hydrant  pressures  taken  at 
representative  points  showed  the  following  conditions,  using  a  gauge 
at  Santa  Clara  and  River  Streets  as  a  reference. 


Street  Time  A.  M.     Pressure 

Santa  Clara  and  River 9:30  57 

Fair  and  Alam 10:00  67 

Seventeenth   Street  Station 10:05  63 

Seventeenth   Street   Station 10:05  65 

Seventeenth  and  Jackson 10:30  63 

Jackson  and  First 10:40  63 

Fire  House  bet.  St.  John  and  Santa 

Clara   10:50  55 

Tenth  and  Margaret 1 1  :oo  54 

Locust  and  Grant 1 1  :io  56 

University  and  Alameda 11:25  61 


FIFTEEN 


The  total  yearly  consumption  during  the  past  five  years,   as 
shown  by  the  Company's  records  was  as  follows: 

1909  1910  1911 

San  Jose M.  G.     2,628  2,737  2,642 

Los    Gatos. . .  .M.  G.        137  137  137 

Saratoga    M.  G.          19  19  19 


Total    M.  G.     2,784    2,893     2>798     2,346     2,220 

Average  M.  G.  D.       7.65       7.95       7.67        6.4        6.1 

While  records  in  sufficient  detail  to  determine  the  daily,  weekly 
and  monthly  maximums  are  not  available,  experience  in  nearby 
cities  where  similar  conditions  exist  indicate  that  the  maximum  uses 
during  the  year  in  question  would  be  about  the  following: 

1909  1910  1911  1912  1913 

Maximum  Day  13.8  14.3  13.8  11.5  n.o 

Maximum  Week 11.5  11.9  11.55  9-6  9-I5 

Maximum  Month....      10.0  10.2  10.0  8.3  7.95 

To  meet  maximum  conditions  the  following  resources  are  avail- 
able in  addition  to  the  gravity  supply  and  outside  pumping  stations: 

Seventeenth  Street  Station 4.3  M.  G.  D. 

Main  Pump  Station 12.0      " 


Total 16.3  M.  G.  D. 

Both  these  stations  discharge  directly  into  the  distributing 
pipe  system.  If  the  gravity  supply  does  not  utilize  the  entire 
capacity  of  the  Tisd ale-San  Jose  conduit,  additional  water  to  the 
amount  of  over  12  M.  G.  D.  can  be  pumped  at  Buena  Vista,  mak- 
ing a  total  emergency  capacity  of  over  24  M.  G.  D.  Recogniz- 
ing the  fact  that  a  complete  dependency  on  electrical  power  to 
operate  the  various  pumping  stations  might  result  in  an  interrup- 
tion to  the  supply  involving  disastrous  consequences  in  the  event 
of  fire,  working  steam  pressure  is  maintained  in  the  boilers  at  the 
Main  Steam  Pumping  Station.  This  station  can  be  put  in  opera- 
tion to  meet  any  emergency  arising  from  failure  of  power  or  other 
causes.  It  is  inconceivable  therefore,  keeping  the  present  use  in 

SIXTEEN 


mind,  that  there  should  be  any  possibility  of  a  total  failure  of  the 
supply. 

The  quality  of  water  is  excellent.  The  well  supply  is  bac- 
teriologically  pure,  and  due  to  the  fact  that  it  goes  directly  to  the 
consumer  without  storage  in  open  reservoirs,  does  not  develop 
algae  with  its  attendant  esthetic  objections.  The  gravity  supply 
is  well  protected  by  the  ownership  in  fee  simple  by  the  Water 
Company  of  the  watershed  lands  bordering  the  Los  Gates  Canon 
streams.  Sanitary  features  on  the  watershed  are  looked  after,  the 
Creek  being  patrolled  during  the  dry  season.  Conduits  conveying 
the  supply  through  inhabited  portions  of  the  catchment  area  are 
so  constructed  and  protected  that  little  danger  of  contamination 
exists. 
Financial  Data: 

There  is  given  herewith  in  tabulated  form  data  pertaining  to 
the  financial  operations  of  the  Company  exclusive  of  capital  expen- 
ditures: 

RECEIPTS. 
Year  Water  Sales          Miscellaneous 

1908 $153,277.11 

1909 159,900.70 

I910 169,442.55 

191 1 172,400.64 

1912 180,676.87 

i9J3 204,283.27 


$7,562.95 
6,890.86 
6,856.25 

5.504.05 
6,256.30 
6,992.01 


Total 

$160,840.06 
166,791.56 
176,298.80 
177,904.69 
186,833.17 
211,275.28 


OPERATING  EXPENDITURES. 


Year 
1908    . 

Taxes 

$12  ^7.80 

Operation 
$76  186.^7 

Depreciation 

Dividends 
$67,06^.00 

Total 

$156,689.26 

TQOQ 

,     I4.22O.7Q 

<;<;,4<;o.4g 

$24,038.46 

69,759x0 

163,487.24 

I9IO 

.  m,^6^.io 

63,158.85 

2^,484.20 

72,163.50 

176,169.74 

IQII 

,    T6,/MC,28 

co,  770.78 

25,648.73 

74,096.50 

175,521.29 

1912     .  .  . 

,    16,402.06 

70,40^.14 

24,^4^.81 

7^,000.00 

186,238.91 

IQIT. 

.    I7.42Q.66 

Q<.68i.i8 

27.014.  ^4 

7^,000.00 

2l6.025.58 

Year  Receipts 

1908 $160,840.06 

1909 166,791.56 

1910 176,298.80 

1911 •••  177,904-69 

1912 186,833.17 

211,275.28 


COMPARISON. 
Expenditures 
$156,689.26 
163,487.24 
176,169.74 
175,521.29 
186,238.91 
216,025.58 


Surplus 
$4,150.80 

3,304-32 
129.06 

2,383-40 
594.26 


Deficit 


$4,750.30 


SEVENTEEN 


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EIGHTEEN 


WATER  WORKS  GENERAL  STATISTICS. 


HERRMANN  &  ELLIOTT,  Engineers,  San  Francisco,  Cal. 
Information  obtained  by  P.  D.  RICE. 

San  Jose          Los  Gatos         Saratoga 


Year  ending 1912. 

Population    45,000. 


Gravity  or  pumping. 
Miles  of  pipe,  all  kinds. 
Miles  of  C.  I.  pipe  only. 
Pop.  per  mi.  of  pipe, 


Both 
141. 

79-3 
320. 
Range  of  sizes,  inches  diam i" — 18' 


%  Wrought  Iron 


43-6 


Taps  in  service — live 9,761. 

Per  1,000  population 217. 

Per  mile  of  pipe 69. 

Persons  per  tap    4.6 

Meters 2,983. 

%  of  taps  metered 30.5 

Consump.  annual  m.  g 2,190. 

Daily,  gpd 6,000,000. 

Per  capita,  gpd 133. 

Per  mile  of  pipe,  gpd 42,644. 

Per  tap,  gpd 615. 

Pressure    (range)   Ibs 45 — 70. 

Hydrants — number 425. 

Per  1,000  population 9.5 

Per  mile  of  pipe 3. 

Gross  revenue,  total  $ 161,438. 

Per   capita  $ 3.59 

Per  mile  of  pipe  $ 1,147. 

Per  tap  $ 16.53 

Per  m.  g.     Consumption  $ 73-71 

Gross  rev.  excl.  hyd.  rev.  $ 158,822. 


Per   capita  $. 

Per  mile  of  pipe  $ 

Per  tap  $ 

Per  mil.  gals.  $ 

Oper.  exp.  excl.  fixed  chgs.  &  depr.  $, 

Per  capita  $ 

Per  mile  of  pipe  $ 

Per  tap  $ 

Per  mil.  gals.  $ 

%  of  gross  revenue 

Net  inc.  excl.  fixed  chgs.  &  depr.  $.  . . 

Per  capita  $ 

Per  mile  of  pipe  $ 

Per  tap  $ 

Per  mil.  gals.  $ 

%  of  gross  revenue 


3-54 
1,128. 
1 6.06 
72.52 
76,798. 
1.71 

545.83 
7.86 

35-52 

47-57 
84,640. 

1.88 

601.56 

8.67 

38.65 

52-43 


1912. 
3,000. 
Both 
13.2 

7-4 
227. 
i"— 10" 

45-5 
832. 

277. 

63- 
3-7 
804. 

96.6 

i37. 
375,ooo. 

125- 
28,409. 

451- 
20 — 125. 

57- 
19. 

4.4 
17,158- 

572 
1,300. 
20.62 
125.24 
16,873. 

5.62 
1,278. 
20.28 
123.16 

8,758. 

2.92 

663.50 

10.52 

63.99 
51.04 

8,399- 

2.80 

636.31 

10.10 

61.31 

48.96 


1912. 

750- 
Both 
2.15 
0.41 

349- 
2"— 6" 

80.6 
207. 
276. 

96. 

3-6 
119. 

57-5 

21. 
57,500. 

77- 

26,744. 

278. 

10 — 80. 

3- 

4- 

i-5 

2,080. 

2-77 
967. 
10.04 
99.04 
2,080. 

2-77 
967. 
10.04 
99.04 
894. 
1.19 

415.63 
4.31 

42-56 

42-97 
1,186. 
1.58 

551-74 

5-73 

56.48 

57-03 


NINETEEN 


San  Jose  Los  Gatos         Saratoga 

Hydrant  rental,  total  $ '. . .  2,616.  285.                     o. 

Per  hydrant  $ 6.15  5.00                  o. 

Per  mile  of  pipe  $ J8.59  2I-59                 o. 

Taxes,  annual  $ 21,560.  I>779-  90. 

%  of  gross  revenue !3-35  10.31                 0.43 

Bonds o.  o.                     o. 

Rate  of  interest o.  o.                      o. 

Capital  stock $1,250,000. 

Floating  debt $135,000. 

Valuation: 

The  valuation  of  the  property  of  the  San  Jose  Water  Com- 
pany was  determined  as  of  December  31,  1913,  by  the  well-known 
method  of  "Reproduction  less  Depreciation,"  now  in  general  use 
for  cases  of  this  kind.  The  San  Jose  Water  Company  is  one  of  the 
oldest  corporations  in  the  State,  dating  back  to  1866,  and  as  might 
be  expected  under  these  conditions  a  history  of  daily  transactions 
in  detail  was  not  obtainable.  Until  a  few  years  ago  only  two 
accounts  were  kept,  entitled  "Construction"  and  "Operation."  To 
the  first  of  these  all  capital  expenditures  of  any  kind  and  nature 
were  charged  in  total  amounts,  whether  used  for  the  purchase  of 
land,  water  rights  or  structure.  The  second  account  was  charged 
with  all  expenditures  made  from  the  revenues  of  the  corporation. 
Large  capital  expenditures  made  in  the  last  few  years  were  shown 
in  detail.  Whenever  possible  this  "actual  cost"  was  considered  in 
connection  with  present  value  as  will  be  noted  on  the  inventory 
valuation  sheets.  For  the  greater  part  of  the  properties  it  was 
necessary  to  draw  upon  the  experience  of  the  writers  extending 
over  some  twenty  years,  over  five  of  which  were  in  the  construc- 
tion and  operation  of  water  works  for  domestic  and  public  use. 
Detailed  construction  costs  of  similar  work  done  under  the  writers' 
direction  and  supervision  were  available.  These  were  changed  to 
conform  to  the  labor  conditions  existing  in  San  Jose.  Prices  of 
material  cover  an  average  of  the  past  five  years,  thereby  avoiding 
unusual  fluctuations  which  would  result  in  abnormal  values. 
Overhead  Charges: 

The  reproduction  labor  and  material  unit  cost  of  the  physi- 

TWENTY 


cal  elements  of  any  utility  does  not  represent  the  value  of  the  util- 
ity, for  the  reason  that  the  unit  costs  used  include  for  labor  only 
the  value  of  the  services  of  the  men  actually  engaged  upon  the 
work  in  question.  In  other  words,  no  allowance  is  made  for  con- 
tingencies, superintendence,  engineering,  legal  expenses,  organiza- 
tion, interest  on  capital  during  construction,  discounts  on  capi- 
tal, insurance  and  taxes.  These  expenses  are  just  as  real  and 
tangible  as  the  cost  of  the  material  and  labor  and  have  been  paid 
for  by  the  Corporation  in  the  same  way  that  material  and  labor 
were  paid  for.  Contingencies  which  cannot  be  foreseen  are  always 
present  and  no  matter  how  carefully  the  estimated  unit  costs  of 
reproduction  are  worked  out,  experience  has  shown  it  is  practi- 
cally impossible  to  determine  accurately  the  probable  cost  within 
5%  of  either  reproducing  or  building  a  structure  new. 

An  engineering  organization  must  be  maintained  for  (i)  the 
report  and  plans  preceding  organization,  (2)  final  plans,  estimates, 
inspection  and  supervision  of  construction.  Experience  has  shown 
that  this  expense  runs  from  2l/2%  to  10%  of  the  cost  of  construc- 
tion depending  upon  the  nature  of  the  work. 

Legal  expenses  of  forming  the  corporation,  obtaining  the  neces- 
sary rights  to  operate,  and  in  connection  with  the  acquisition  of 
rights  of  way  and  necessary  lands  should  be  included,  as  well  as 
fees  paid  to  the  authorities  in  connection  with  issuing  securities. 

A  proportionate  part  of  the  office  expense,  such  as  the  execu- 
tive, auditing,  purchasing  and  other  departments,  is  properly  a  part 
of  construction  cost. 

During  the  construction  of  the  works  capital  must  be  pro- 
vided for  from  time  to  time  to  meet  the  expenditures,  Until  such 
time  as  the  completed  works  can  be  operated,  the  interest  on  this 
capital  must  be  met  from  some  source  other  than  revenue.  This 
interest  is  a  proper  charge  to  construction.  It  varies  with  the 
magnitude  of  the  works,  the  time  taken  for  construction,  and  the 
condition  of  the  money  market.  In  this  case  the  assumed  time  for 
the  construction  of  the  plant  of  the  San  Jose  Water  Company  has 

TWENTY-ONE 


been  taken  at  two  years  and  the  interest  rate  at  6%.  There  must 
also  be  taken  into  account  the  discounts  in  marketing  securities,  all 
of  which  should  become  a  part  of  the  construction  cost. 

Liability  and  plant  insurance  is  another  charge  which  is  always 
present,  amounting  to  between  3%  and  4%  of  the  labor  cost  for 
ordinary  construction  work.  Finally  taxes  must  be  paid  on  the 
property  as  it  is  acquired,  and  before  it  becomes  operative. 

All  of  the  above  expenses  are  present  during  construction  and 
properly  become  a  part  of  the  capital  outlay.  They  have  been 
recognized  by  the  Courts  and  Commissions  as  proper  charges,  the 
only  indeterminate  factor  being  the  amount  allowed.  This  of 
course  varies  with  local  conditions  and  the  size  and  nature  of  the 
utility.  The  Public  Service  Commission  of  New  York  added  for 
these  expenses  23%  in  the  case  Brooklyn  Borough  versus  Kings 
County  Company.  In  the  Queensborough  Gas  and  Electric  Com- 
pany Case  22%  was  added.  In  the  application  of  the  Rochester 
Corning  Elmira  Traction  Company  for  authority  to  issue  secur- 
ities the  Commission  allowed  i6l/2%  for  overhead  charges.  The 
Wisconsin  Commission  has  usually  added  12%  for  overhead 
charges,  with  an  additional  allowance  for  "going''  or  "earning 
value". 

In  the  valuation  of  the  plant  of  the  San  Jose  Water  Company 
it  has  been  assumed  the  shortest  time  in  which  the  plant  could  be 
efficiently  reproduced  is  two  years  and  overhead  charges  have  been 
worked  out  on  this  basis.  It  is  also  recognized  that  certain  parts 
of  the  plant  would  not  require  as  much  engineering  supervision 
or  head  office  expense  as  others.  With  these  facts  in  mind  the 
following  rates  have  been  used: 


TWENTY-TWO 


ONE  UNIT   AND    SWITCHBOARD   AT   BUENA    VISTA    PUMP    STATION. 


BUENA   VISTA   ELECTRIC   PUMP    STATION. 
Water  is  Pumped  from  Deep  Wells,  Insuring  the  Continued  Purity  of  the  Supply. 


DISTRIBUTING  SYSTEM 

Interest  during  construction   (2  years) 6    % 

Contingencies    and    omissions 5    % 

Engineering   and   supervision 4-5% 

Permit  to  issue  securities.  .  . i    % 

Legal   expenses,   organization 2    % 

Taxes,   insurance    *•$% 


Total    20  % 

PUMPING  PLANTS,  RESERVOIRS,  CONDUITS,  DAMS 

Interest  during  construction   (2  years) 6  % 

Contingencies  and  omissions 5  % 

Engineering   and   supervision 7  % 

Permit  to  issue  securities I  % 

Legal   expenses,   organization 2-5% 

Taxes,   insurance    


Total    23.0% 

Depreciation : 

The  question  of  depreciation  has  long  been  a  subject  for  argu- 
ment not  only  between  engineers,  but  before  Courts,  Commissions 
and  other  rate  fixing  tribunals.  There  is  no  doubt  that  an  honest 
difference  of  opinion  can  exist  in  regard  to  the  condition  of  a  pipe, 
pump  or  any  other  article,  but  it  seems  to  the  writers  that  much 
of  this  dispute  might  have  been  avoided  had  it  been  kept  in  mind 
that  the  only  true  depreciation  that  can  occur  (neglecting  for  the 
moment  functional  depreciation)  is  a  lessening  in  the  value  or  worth 
due  to  wear,  and  that  this  actual  loss  in  worth  is  not  represented 
by  the  application  of  any  theory  of  probable  life  but  by  the  actual 
condition  of  the  structure  under  consideration.  While  it  is  true 
that  in  fixing  a  rate  for  the  sale  of  a  public  service  corporation 
commodity  depreciation  must  be  allowed,  and  that  some  theoretical 
finite  life  must  be  determined  on,  upon  which  to  base  the  rate  or 
allowance,  it  is  equally  as  certain  that  this  assumed  life  is  for  what 
might  be  termed  "accounting  purposes"  only  or  the  building  up 
of  a  depreciation  fund,  and  bears  no  relation  to  the  actual  condi- 

TWENTY-THREE 


DEPRECIATION  DIAGRAM, 
Illustrating  Result  of  Using  Sinking  Fund  and  Straight  Line  Theories. 

TWENTY-FOUR 


tion  or  value  of  the  property  at  a  given  time.  The  fallacy  of 
attempting  to  ascertain  the  "present  value"  of  a  structure  by  care- 
fully working  up  the  cost  of  reproduction  from  actual  facts,  and 
then  depreciating  this  value  by  a  factor  determined  from  the  ex- 
pired and  theoretical  "probable  life"  is  obvious  if  one  considers 
for  a  moment  the  results  that  are  obtained  depending  upon  the 
method  of  depreciation  adopted. 

Various  ways  of  providing  for  depreciation  funds  have  been 
used,  all  of  which  are  modifications  of  two  known  as  the  "Straight 
Line"  and  "Sinking  Fund"  methods.  The  first  assumes  that  the 
depreciation  fund  shall  be  created  by  charging  a  flat  rate  each 
year  against  the  original  cost,  based  on  the  expectancy  of  life.  For 
instance,  a  structure  with  an  assumed  life  of  twenty  years  and  a  cost 
of  $100.00  would  carry  an  annual  depreciation  allowance  of  $5.00. 
This  method  assumes  no  interest  will  be  received  on  the  deprecia- 
tion fund.  The  "Sinking  Fund"  method  assumes  that  a  sum  will 
be  set  aside  each  year  at  compound  interest,  that  will  at  the  end 
of  the  term  of  life  of  the  structure  under  consideration  return  the 
full  investment.  Both  of  these  methods  have  been  largely  used. 
They  are  cited  here  simply  to  illustrate  the  erroneous  conclusions 
that  will  be  arrived  at,  should  either  of  them  be  applied  to  prop- 
erty with  an  already  partly  expired  life  to  determine  present  value. 

On  the  accompanying  diagram  there  is  shown  the  percentage 
of  value  remaining  at  any  age  for  apparatus  having  lives  of  twenty- 
five,  fifty,  seventy-five  and  one  hundred  years,  assuming  that  this 
value  has  been  determined  by  applying  either  of  these  theoretical 
depreciation  rates  to  the  reproduction  value.  The  sinking  fund 
payments  are  compounded  at  5%  interest.  Referring  to  the  diagram 
it  is  apparent  at  a  glance  that  there  is  a  wide  difference  in  "Per- 
centage of  Original  Value  Remaining"  or  "Present  Value"  depend- 
ing upon  which  of  the  two  methods  is  used.  The  differences  are 
tabulated  below: 


TWENTY-FIVE 


Assumed  Life  100  Years. 
Present  Value 


Expired  Life 

Straight  Line 

Sinking  Fund 

Difference 

o  Years 

100% 

100% 

0% 

25  Years 

75% 

98% 

23% 

50  Years 

50% 

92% 

42% 

75  Years 

25% 

7i% 

46% 

100  Years 

0% 

0% 

0% 

Assumed  Life  75  Years. 

Present  Value 

Expired  Life 

Straight  Line 

Sinking  Fund 

Difference 

o  Years 

100     % 

100     % 

0     % 

25  Years 

66.6% 

94-5% 

27.9% 

50  Years 

33-3% 

73    % 

39-7% 

75  Years 

0     % 

0     % 

0     % 

Assumed  Life  50  Years. 

Present  Value 

Expired  Life 

Straight  Line 

Sinking  Fund 

Difference 

o  Years 

100% 

100% 

0% 

20  Years 

60% 

84% 

24% 

30  Years 

40% 

69% 

29% 

40  Years 

20% 

43% 

23% 

50  Years 

0% 

0% 

0% 

Assumed  Life  25  Years. 

Present  Value 

Expired  Life 

Straight  Line 

Sinking  Fund 

Difference 

o  Years 

100% 

100% 

0% 

5  Years 

80% 

89% 

9% 

10  Years 

60% 

74% 

H% 

15  Years 

40% 

55% 

15% 

20  Years 

20% 

3i% 

n% 

25  Years 

0% 

0% 

0% 

It  is  clearly  apparent  that  neither  one  of  the  percentages  bears 
any  relation  to  the  actual  condition  of  the  plant  itself,  as  they 
ignore  all  of  those  factors  upon  which  the  expectancy  of  life 
depends.  It  is  also  apparent  that  if  the  property  were  valued  by 


TWENTY-SIX 


two  capable  investigators,  one  believing  in  the  Straight  Line  and 
the  other  in  the  Sinking  Fund  theory,  that  they  would  get  values 
as  greatly  at  variance  with  each  other  as  with  the  true  service 
value  of  the  utility. 

It  may  be  held  that  the  Corporation  should  have  provided  a 
depreciation  fund  out  of  revenues  so  that  regardless  of  the  condi- 
tion of  the  plant  at  the  time  of  valuation,  there  will  exist  a  fund 
which  when  added  to  the  present  value  of  the  plant  will  approxi- 
mate the  cost.  This  theory  may  be  applicable  to  corporations  of 
recent  inception,  but  it  must  also  be  remembered  that  little  knowl- 
edge was  had  until  comparatively  recent  years  as  to  the  necessity 
for  such  a  fund,  and  usually  it  was  not  considered  in  fixing  rates. 

The  foregoing  discussion  on  the  method  of  arriving  at  present 
value  in  connection  with  depreciation  is  not  to  be  construed  as  an 
argument  against  the  manner  in  which  depreciation  funds  are  to 
be  provided.  To  properly  protect  the  stability  of  the  works  and 
guarantee  service  it  is  necessary  to  provide  a  fund  for  replacement. 
The  annual  contribution  to  this  fund  can  only  be  determined  on 
probabilities.  It  is  unfortunate  that  so  much  of  the  published 
literature  on  the  expectancy  of  life  of  various  structures  is  based 
upon  experience  in  the  eastern  part  of  the  United  States  where 
conditions  are  more  severe  than  in  California,  as  the  result  has 
been  to  place  too  short  a  life  on  many  structures. 

Functional  depreciation  or  obsolescence  exists  in  water  works 
to  a  much  smaller  degree  perhaps  than  in  other  utilities.  In  the 
development  of  many  of  the  arts,  a  number  of  which  are  of  com- 
paratively recent  origin  changes  and  improvements  occur  almost 
from  day  to  day.  This  is  not  the  case  with  water  works  except- 
ing some  of  the  parts  of  lesser  importance.  Consequently  this 
feature  of  depreciation  appears  principally  as  inadequacy  rather 
than  obsolescence,  and  therefore  depends  almost  entirely  on  local 
conditions. 

In  determining  the  accrued  depreciation  of  the  structural 
properties  of  the  San  Jose  Water  Company,  the  condition  was 

TWENTY-SEVEN 


determined  by  personal  examination.  The  distributing  pipe  sys- 
tem was  inspected  and  a  number  of  samples  of  pipes  were  cut  out 
at  points  selected  with  a  view  to  age  and  location.  Soil  condi- 
tions were  looked  into  with  great  care  and  both  the  interior  and 
exterior  condition  of  the  pipes  received  careful  scrutiny.  From 
the  condition  and  expired  life  a  "Condition  Percentage  Depre- 
ciation" was  worked  out  and  applied  to  the  reproduction  value 
in  order  to  obtain  the  present  value.  As  far  as  possible  this  course 
was  followed  with  the  remainder  of  the  structures  also  resulting 
in  a  total  present  value  of  the  physical  properties,  excepting  land  of 
$1,539,699.34,  as  summarized  in  Table  No.  i  and  shown  in  detail  on 
the  accompanying  schedule: 

Development  Expense: 

No  undertaking  earns  a  proper  return  on  the  investment  from 
its  inception.  This  has  been  particularly  true  of  public  utility 
corporations,  where  a  large  initial  expenditure  is  necessary  to  fur- 
nish the  commodity  to  consumers.  Money  has  to  be  spent  and 
losses  endured  to  bring  the  business  to  the  point  where  it  returns 
a  fair  rate  upon  the  investment.  In  a  private  enterprise  early 
losses  can  be  compensated  for  by  providing  for  them  out  of  future 
returns,  but  in  the  case  of  a  regulated  utility  this  opportunity  does 
not  exist.  It  is  generally  recognized  in  these  cases  that  the  cor- 
poration is  entitled  to  be  reimbursed  for  the  early  losses  attendant 
upon  the  building  up  of  a  paying  business.  The  history  of  such 
California  Water  Companies  as  the  writers  are  familiar  with  all 
show  losses  to  some  extent.  The  history  of  the  development  of  the 
San  Jose  Water  Company  shows  that  during  the  years  1869-72 
inclusive,  various  assessments  were  collected  amounting  in  all  to 
$35.00  per  share,  or  about  $105,000.00.  It  is  reasonable  to  assume 
that  part  of  these  assessments  was  due  to  deficits  in  operating 
revenue,  and  it  is  certain  that  no  dividends  were  paid.  It  is  unfor- 
tunate that  the  books  of  the  Company  were  stolen  in  1869,  as  it  is 
probable  in  view  of  the  financial  history  above,  that  assessments 

TWENTY-EIGHT 


TABLE  No.  i. 

VALUATION  OF  STRUCTURAL  PROPERTIES. 
San  Jose  Water  Company. 

Distributing  System,  San  Jose $816,521.10 

Supply  Line,  Tisdale  Reservoir — San  Jose 121,308.89 

Main  Steam  Pumping  Plant 72,706.99 

Main  Electric  Pumping  Plant 32>475-53 

Seventeenth  Street  Electric  Pumping  Plant 32,018.95 

Buena  Vista  Electric  Pumping  Plant 24,642.49 

Buena  Vista  Steam  Pumping  Plant 16,476.35 

Three  Mile  Pumping  Plant 794-51 

Three  Mile  Reservoir 11,089.77 

Seven  Mile  Reservoir 12,232.14 

Cambrian  Reservoir 10,487.07 

Santa  Clara  Street  Yard 12,526.01 

Vehicles,  Stock,  etc 29,342.93 

Distributing  System,  Los  Gatos 85,102.33 

Almond  Grove  Pumping  Plant 11,061.33 

Hill  Well   Pumping  Plant 7,842.44 

Tisdale  Pumping  Plant « 1,389.69 

Mountain    Spring   Reservoir 12,840.77 

Ousley  Reservoir 10,450.76 

Pipe  Line,  Ousley  Reservoir — Los  Gatos 9,635.19 

Williams   Reservoir 31,938.69 

Lake  Ranch  Reservoir 29,526.19 

Upper  Howell  Reservoir 28,868.49 

Lower  Howell  Reservoir 24,333.83 

Tisdale  Reservoir 3,741.33 

Flume,  Jones  Dam — Tisdale  Reservoir 40,323.07 

Trout  Dam  and  Pipe  Line 1,403.85 

Beckwith  Pipe  Line 3,501.56 

Lower  Beardsley  Gulch  Pipe  Line 3,925.04 

Upper  Beardsley  Gulch  Pipe  Line 4,339.52 

Forbes  Dam  and  Pipe  Line 2,823.75 

Upper  Cavanaugh  Dam  and  Line  to  Ousley  Reservoir 12,626.82 

Lower  Cavanaugh  Dam  and  Flume 4,174.58 

Jones   Diverting  Dam I,3°5-33 

Distributing  System,   Saratoga 4,700.76 

Saratoga    Reservoir 2,484.69 

Saratoga  Reservoir  Supply  Line 2,403.50 

Miscellaneous  Property  not  in  Use : 

Roberts  Station  Frame  Building $1,191.32 

Coyote   Wells 2,641.78 

River  Street  Cottage 2,500.00  6,333.10 

Total    $1,539^99-34 


TWENTY -NINE 


were  levied  prior  to  this  date.  It  is  certain  in  view  of  the  fact 
that  assessments  were  necessary  that  the  revenue  was  not  sufficient 
to  provide  for  the  fixed  charges  and  operating  expenses,  to  say 
nothing  of  a  return  upon  the  investment.  The  fact  that  the  Com- 
pany has  a  fully  connected  and  established  business  gives  in  addi- 
tion to  the  reproduction  value  of  the  physical  plant,  a  "service 
value." 

Various  methods  have  been  used  to  determine  this  intangible 
value  that  accrues  to  an  operating  public  utility.  Capitalization 
of  the  net  earnings  used  in  private  enterprises  is  not  available  here 
for  the  obvious  reason  that  these  earnings  in  a  regulated  utility 
depend  entirely  on  its  value.  If  it  were  possible  to  ascertain  the 
actual  amount  expended  for  the  construction  of  the  plant  plus  the 
cost  of  acquiring  the  business,  the  development  expense  would  be 
comparatively  simple  to  determine.  The  value  of  the  stocks  and 
bonds  does  not  always  have  a  direct  bearing  on  the  service  value 
of  a  utility. 

A  method  first  used  in  the  valuation  of  the  Dubuque  Water 
Works  and  later  elaborated  by  Messrs.  Metcalf  and  Alvord  seems 
to  offer  the  most  logical  method  for  determining  this  value.  This 
method  determines  the  cost  of  reproducing  the  business  over  a 
period  of  years  covering  the  completion  of  the  construction  work 
and  the  first  few  years  of  its  operation.  A  comparative  plant  is 
used  for  this  purpose  corresponding  to  the  one  in  use,  assuming 
the  beginning  of  construction  to  be  the  date  of  the  valuation.  Com- 
putations are  made  as  to  the  difference  in  earning  power  of  the 
two  plants,  and  "The  sum  of  the  present  worths  of  the  annual 
excess  in  net  return  of  the  existing  plant  over  the  comparative  plant 
in  the  period  of  years  from  the  date  of  taking  to  the  time  when 
the  earnings  of  the  comparative  plant  are  assumed  to  become  identi- 
cal with  those  of  the  existing  plant,  represents  the  development 
expense  of  the  existing  plant." 

While  this  method  has  been  criticized  as  depending  entirely 

THIRTY 


upon  judgment  in  regard  to  the  time  required  by  the  comparative 
plant  to  reproduce  the  earning  capacity  of  the  existing  plant,  it 
may  be  said  that  an  appraiser  sufficiently  familiar  with  water 
works  to  make  a  reproduction  valuation  of  the  structural  plant, 
would  also  be  competent  to  determine  the  value  of  development 
expense. 

It  has  been  noted  before  that  the  construction  period  would 
be  two  years.  In  view  of  the  fact  that  the  town  of  San  Jose  is 
situated  directly  over  the  water-bearing  gravels  of  the  Santa  Clara 
Valley  affording  an  opportunity  for  every  consumer  to  supply  him- 
self through  the  medium  of  a  private  well,  it  is  reasonable  to  sup- 
pose that  it  would  require  a  more  earnest  effort  and  a  consequently 
longer  time  to  acquire  the  volume  of  business  now  enjoyed  by  the 
Water  Company,  than  if  a  town  situated  in  a  location  where  water 
is  not  so  easily  accessible  was  under  consideration.  All  things  con- 
sidered, a  period  of  six  years  including  the  construction  period 
appears  to  be  the  time  necessary  for  the  comparative  plant  to 
acquire  the  present  business  of  the  old  plant.  Naturally  the  order 
of  construction  would  be  such  as  to  allow  the  use  at  the  earliest 
moment  of  as  much  of  the  plant  as  possible.  In  the  following 
calculation  of  the  Development  Expense  it  has  been  assumed  that 
as  much  of  the  distributing  pipe  system  as  possible  was  laid  in  the 
first  year,  together  with  sufficient  supply  works  to  furnish  water 
to  consumers  at  a  period  commencing  one  year  after  the  beginning 
of  construction.  The  tabulation  and  diagram  are  explanatory  of 
the  method  used. 


THIRTY-ONE 


300 


DEVELOPMENT   EXPENSE   DIAGRAM. 


THIRTY-TWO 


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THIRTY-THREE 


The  Development  Expense  ascertained  is  $212,100.00.  This 
approximates  the  probable  gross  revenue  for  the  year  1913,  and 
compares  favorably  with  amounts  allowed  in  other  localities  under 
similar  conditions.  Inasmuch  as  this  amount  represents  the  total 
cost  of  acquiring  the  present  business  of  the  San  Jose  Water  Com- 
pany it  is  not  unreasonable  and  is  commensurate  with  the  amount 
that  any  business  man  would  consider  a  proper  expenditure  to 
place  a  business  of  similar  magnitude  on  a  paying  basis. 

Water  Rights — Sources  of  Supply: 

The  water  used  by  the  San  Jose  Water  Company  is  derived 
from  two  general  sources  of  supply, — surface  waters  gathered  in 
the  Santa  Cruz  Mountains  which  form  the  barrier  between  Santa 
Clara  Valley  and  the  Ocean,  and  subterranean  waters  drawn  from 
the  deep  gravel  measures  underlying  the  Santa  Clara  Valley. 

The  mountain  supply  is  obtained  from  the  catchment  area  of 
Los  Gatos  Creek,  the  largest  stream  on  the  east  slope  of  the  Santa 
Cruz  Mountains.  Water  is  diverted  at  several  points  in  the  watershed 
of  Los  Gatos  Creek  the  lowest  in  elevation  being  at  Forbes  Dam. 
Reservoirs  are  used  for  storing  flood  waters  with  which  to  augment 
the  summer  flow  of  the  stream.  The  Williams,  Howells  and  Lake 
Ranch  Reservoirs  are  the  principal  ones  used  for  this  purpose,  the 
stored  water  being  drawn  from  the  reservoirs  as. needed  and  con- 
ducted down  the  creek  channel  for  a  distance  of  eight  miles  through 
lands  owned  by  the  San  Jose  Water  Company.  The  ownership  of 
these  lands  insures  the  continued  purity  of  the  water,  and  is  the 
only  means  whereby  the  supply  may  be  effectively  guarded  against 
contamination. 

The  catchment  area  is  one  of  high  water  productivity,  a  visible 
indication  of  this  being  the  rank  growth  of  vegetation  on  the  moun- 
tain sides.  It  is  very  similar  in  character  to  the  West  Union,  Pes- 
cadero,  Pilarcitos  and  San  Andreas  catchment  areas  farther  north. 
On  all  of  these  watersheds  are  found  water  loving  trees  and  shrubs, 
and  all  have  a  well-sustained  summer  flow. 

Records  of  run-off  of  the  Los  Gatos  Creek  are  not  available  so 

THIRTY-FOUR 


that  in  order  to  estimate  the  water  productivity  of  this  catchment 
area  it  was  necessary  to  make  deductions  from  rainfall  data  using 
as  a  basis  the  relation  between  rainfall  and  run-off  found  on  similar 
catchment  areas.  It  is  recognized  that  actual  measurements  of  run- 
off are  to  be  preferred  to  any  deductions  made  from  precipitation, 
and  it  is  further  recognized  that  the  relation  between  precipita- 
tion and  run-off  depends  upon  many  complex  factors.  In  the 
absence  of  run-off  measurements  however,  resort  must  be  had  to 
the  indirect  method  of  using  run-off  curves  giving  the  annual  run- 
off per  square  mile  for  different  depths  of  precipitation.  This 
method  is  recognized  by  hydraulic  engineers  of  western  practice 
as  giving  reliable  results  and  is  widely  used.  Accordingly  a  care- 
ful search  was  made  for  precipitation  data  in  the  catchment  area 
and  records  varying  in  length  of  observed  time  were  found  at  the 
following  places  as  tabulated  below.  These  locations  are  shown  on 
the  accompanying  map. 

Precipitation,  in  inches. 


Two  very  dry  years. 
Two  very  dry  years. 

Includes  series  of  wet  years. 
Includes  two  very  dry  years. 


By  comparison  with  San  Francisco,  which  is  the  only  long 
rainfall  record  in  this  portion  of  the  country,  these  records  were 
expanded  to  equal  lengths  of  time  in  accordance  with  standard 
practice  among  hydraulic  engineers.  This  method  of  obtaining 
reliable  mean  precipitation  for  stations  with  short  records  was 
first  developed  by  Wm.  H.  Hall,  State  Engineer  of  California,  in 
1880,  and  subsequently  used  by  many  prominent  engineers.  In  the 
investigation  for  the  future  water  supply  of  San  Francisco,  Mr. 


Station. 

Los  Gatos  

Length  of 
record,  in 
years. 

28 

Mean  of 
actual 
observa- 
tions. 

33.23 

Expanded, 
mean 
(60  years). 

32.8S 

Howells  

2 

17.26 

34.38 

Wrights  

8 

42.  6  1; 

42.60 

Williams  

2 

23.3O 

44-73 

Morrell  

17 

4C.7Q 

46.^7 

Dick  

I 

c;6.i4 

50.88 

Deacon  

8 

62.60 

56.43 

Saratoga  

14 

3O.2S 

31.05 

Posts  

4 

47.  -?c 

50.70 

Moodv  . 

23 

32.36 

32.85 

THIRTY -FIVE 


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THIRTY-SIX 


Grunsky  says  of  this  method  (Vol.  61,  American  Society  of  Civil 
Engineers)  : 

aRain  does  not  fall  in  California  in  every  month  of 
the  year,  as  in  the  Eastern  States.  The  rainy  season  begins 
in  November  and  ends  in  April.  So  little  rain  falls  from 
May  ist  to  the  end  of  October  that  this  period  may  be 
called  rainless.  There  is  no  rain  during  this  period  which 

has  any  effect  worthy  of  note  upon  the  flow  of  streams." 

********** 

"The  recurrence  of  rain  storms  (from  six  to  twenty 
in  a  rainy  season  of  6  months)  has  the  usual  equalizing 
effect  of  repetition,  and  thereby  increases  the  probability 
that  the  fall  of  rain  in  the  course  of  a  year,  at  any  point 
of  the  central  and  northern  portions  of  California,  will 
bear  fairly  uniform  relation  to  the  rainfall  at  some  central 
point  of  observation,  such  as  San  Francisco  or  Sacra- 
mento." 

From  these  expanded  rainfall  records  lines  of  equal  rain- 
fall or  isohyetal  lines  have  been  determined  and  by  them  the  mean 
area  rainfall  ascertained.  By  comparison  with  the  mean  precipi- 
tation at  Los  Gatos,  a  ratio  between  the  mean  area  rainfall  and 
that  of  Los  Gatos  was  obtained  using  the  Los  Gatos  record  as  a 
base,  and  applying  this  ratio  the  area  precipitation  of  the  catchment 
area  for  the  different  seasons  was  obtained. 

The  similarity  in  character  and  location  of  the  San  Mateo 
Peninsula  and  Los  Gatos  catchment  areas  is  so  marked  that  the  pre- 
cipitation and  run-off  records  of  the  former,  carefully  taken  for  the 
past  forty-four  years  were  applied  to  the  Los  Gatos  conected  rainfall 
record  and  a  fair  approximation  of  the  seasonal  run-off  was  obtained. 
These  were  plotted  as  a  cumulative  or  "mass"  curve  from  which 
the  safe  annual  yield  was  determined.  Inspection  of  the  diagram 
shows  that  with  sufficient  storage  the  catchment  area  will  yield 
about  25  M.  G.  D.  With  well  developed  storage  the  safe  yield 
would  be  21.2  M.  G.  D.,  and  it  is  fair  to  assume  that  the  produc- 
tivity of  this  catchment  area  is  o\er  20  -.  G.  D. 

The  amount  of  water  drawn  from  this  source  varies  for  differ- 
ent months  in  the  year  and  for  different  seasons.  For  the  years 

THIRTY -SEVEN 


1908  to  1912  inclusive  it  averaged  5.4  million  gallons  daily.  By 
reason  of  the  fact  that  only  partial  storage  has  so  far  been  pro- 
vided by  the  construction  of  the  present  reservoirs  of  the  San  Jose 
Water  Company,  it  is  not  possible  to  utilize  the  total  productivity 
though  by  increasing  the  storage  the  amount  now  drawn  can  be 
largely  augmented. 

Subterranean  Supply: 

In  -addition  to  the  surface  supply,  the  San  Jose  Water  Com- 
pany draws  water  from  deep  wells  in  and  near  the  City  of  San 
Jose.  These  wells  vary  in  depth  up  to  1,100  feet  and  are  bored 
with  diameters  from  8"  to  16".  They  tap  the  deep  gravel  meas- 
ures underlying  the  Santa  Clara  Valley.  Owing  to  the  great  depth 
of  the  source  the  supply  is  absolutely  pure  in  quality  and  uniform 
in  quantity. 

These  gravels  occur  in  lenticular  form  and  are  the  remnants 
of  ancient  streams  which  crossed  and  re-crossed  the  valley  floor, 
swinging  pendulum-like  from  one  side  of  the  valley  to  the  other 
as  the  beds  of  the  old  streams  were  built  up  by  the  deposition  of 
gravel,  sand,  and  clay  carried  down  during  floods  from  the  sur- 
rounding mountains.  The  alluvium  deposited  in  this  manner  and 
now  forming  the  valley  floor  probably  has  a  depth  of  over  2,000 
feet,  forming  a  vast  underground  reservoir  which  is  tapped  by 
the  deep  wells  of  the  San  Jose  Water  Company. 

The  amount  of  water  drawn  from  this  source  by  the  Company 
varies  with  the  season  and  with  the  time  of  the  year.  The  greatest 
continuous  draft  for  periods  varying  from  one  week  to  one  month 
is  5.6  M.  G.  D.,  and  this  is  the  extent  of  the  right  of  the  San  Jose 
Water  Company  to  the  waters  from  this  source  of  supply  as  devel- 
oped at  the  present  time. 

Acquisition  of  Rights: 

In  order  to  secure  the  right  to  divert  the  waters  of  Los  Gatos 
Creek,  it  was  necessary  to  purchase  either  the  lands  or  water  rights 
of  the  lands  bordering  the  stream  above  the  point  where  the  low 

THIRTY-EIGHT 


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water  flow  ceased,  which  was  near  the  site  of  the  present  town  of 
Campbells.  It  was  also  necessary  to  provide  means  to  prevent  the 
contamination  of  the  water  thereby  protecting  the  public  from 
epidemics  of  typhoid  and  similar  water-borne  diseases.  The  Los 
Gatos  Canyon  was,  and  still  is,  a  favorite  place  for  picnics  and 
camping  parties,  a  source  of  contamination  practically  impossible  to 
restrain  without  absolute  control  of  the  watershed. 

Wisely  the  Company  purchased  not  only  the  water  rights  along 
the  stream  as  far  down  as  Campbells  but  also  the  land  bordering 
the  creek  above  the  point  of  diversion.  Beginning  in  1870  water 
rights  to  approximately  3,000  acres  of  land  just  upstream  from 
Campbells  were  purchased.  Unfortunately  owing  to  the  method  of 
accounting  in  early  years,  it  is  impossible  to  ascertain  the  cost  of 
these  water  rights.  As  an  element  having  bearing  on  the  present 
value  the  cost  would  be  of  great  assistance.  As  nearly  as  can  be 
determined  from  existing  evidence,  at  least  $100,000  was  paid  out 
for  this  purpose. 

Several  methods  have  been  advanced  to  arrive  at  the  value  of 
water  rights.  The  most  logical  method  is  to  apply  the  water  for 
which  the  right  has  been  developed  to  the  highest  use  to  which  it 
can  be  put  wherein  it  competes  in  the  open  market,  and  capitalize 
its  estimated  net  earning  in  this  use.  By  reason  of  the  fact  that  in 
this  locality  the  supply  of  water  for  domestic  purposes  is  not  a  com- 
petitive industry,  we  must  turn  to  irrigation,  the  next  highest  use 
where  this  condition  exists,  knowing  that  the  value  obtained  for  the 
water  right  therefrom  is  less  than  its  value  for  domestic  purposes. 
The  domestic  use  of  water  is  a  higher  use  than  irrigation  and  the 
water  rights  used  for  this  purpose  have  a  correspondingly  higher 
value. 

Lands  are  now  irrigated  to  some  extent  from  Los  Gatos  Creek 
though  the  water  rights  of  the  San  Jose  Water  Company  on  this 
stream  are  superior  to  all  irrigation  use.  The  water  of  the  Los 
Gatos  Creek  at  present  used  by  the  San  Jose  Water  Company 
could  be  used  for  irrigation  purposes  on  lands  lying  southeast  of 
Los  Gatos. 

THIRTY-NINE 


Irrigation  in  the  Santa  Clara  Valley  was  very  carefully  and 
thoroughly  investigated  by  Professor  S.  Fortier,  Chief  of  the  Irriga- 
tion Investigations  of  the  U.  S.  Department  of  Agriculture,  the 
data  relating  thereto  being  published  in  O.  E.  S.  Bulletin  No.  158. 
Subsequently  another  investigation  was  made  by  the  Conservation 
Commission  of  California  in  co-operation  with  the  U.  S.  Experi- 
ment Stations,  the  results  of  this  latter  investigation  being  given  in 
O.  E.  S.  Bulletin  No.  245.  Both  of  these  authorities  find  that  the 
average  net  duty  of  water  for  irrigation  in  this  valley  is  1.6  acre 
feet  per  acre,  per  year. 

In  the  latter  bulletin  the  sale  price  of  water  is  given  as  follows : 

Orchard  Irrigation  Company $3.60  per  ac.  ft. 

Santa  Clara  Valley  Water  Company. . . .     2.00    "      "     " 
Pumped  Water  up  to 20.00     "      "     " 

Professor  Fortier,  in  Bulletin  No.  158,  gives  prices  ranging 
from  $2.50  to  $13.00  per  acre  foot,  according  to  the  availability  of 
water  during  the  various  seasons  of  the  year.  It  is  fair  therefore 
to  assume  an  average  price  of  $4.00  per  acre  per  year  for  irrigation 
water,  which  with  a  duty  of  1.6  acre  foot  per  acre,  per  year,  amounts 
to  about  $2.50  per  acre  foot  of  water. 

The  present  annual  draft  of  the  San  Jose  Water  Company 
from  Los  Gatos  Creek  (6400  acre  feet)  using  a  duty  of  1.6  acre 
foot  per  acre  per  year  would  irrigate  4000  acres.  Land  to  use  this 
water  is  available  on  the  west  side  of  Santa  Clara  Valley.  As  a 
matter  of  fact,  the  farmers  around  Campbells  owning  lands  aggre- 
gating much  more  than  4000  acres  are  at  present  seriously  consid- 
ering a  project  for  bringing  water  from  the  Coyote  River  20  miles 
away  with  which  to  irrigate  their  orchards.  These  people  would 
gladly  purchase  the  water  of  the  San  Jose  Water  Company  were 
it  available  for  their  use. 

It  is  estimated  that  the  capital  expenditure  necessary  to  place 
the  waters  of  Los  Gatos  Creek  on  the  4000  acres  would  be  as  fol- 
lows: 

FORTY 


Lands  and  rights  of  way $15,000 

Diverting  structures    2,000 

Main   Pipe  Line 16,000 

Canals    5,ooo 


Total $38,000 

It  is  estimated  that  the  annual  charges  against  this  plant  would 
be  6%  on  the  lands  and  rights  of  way  and  10%  on  structures.  The 
annual  charges  are  therefore: 

6%    on    $15,000 $900.00 

10%    on    $23,000 2,300.00 


Total  Annual   Charges. .  . $3,200.00 

The  gross  annual  revenue  for  6,400  acre  feet  at  the  rate  above 
assumed  as  fair,  would  be:  4,000  x  $4.00 $16,000 

Gross  revenue   $16,000.00 

Annual   charges    3,200.00 


Net  revenue $12,800.00 

Capitalized  at  6%  this  gives  $213,000,  which  represents  the 
value  of  the  developed  water  right  of  the  San  Jose  Water  Com- 
pany on  Los  Gatos  Creek  for  irrigation  purposes,  or  approximately 
$40,000  per  M.  G.  D.  For  the  purpose  of  comparison,  it  may  be  stated 
that  Judge  Farrington  found  a  value  of  $60,000  per  million  gallons 
per  day  in  the  rate  suit  of  the  Spring  Valley  Water  Company  vs.  the 
City  of  San  Francisco,  in  1903. 

The  subterranean  waters  to  which  the  San  Jose  Water  Com- 
pany has  developed  a  water  right  may  be  utilized  for  irrigation  in 
a  manner  similar  to  that  described  for  the  surface  waters  of  Los 
Gatos  Creek.  In  both  the  bulletins  of  the  U.  S.  Agricultural 
Department,  above  referred  to,  it  is  stated  that  pumped  water 
commands  a  higher  price  than  does  surface  water  in  existing  irri- 
gation ditches.  This  is  due  to  the  fact  that  water  in  the  latter  is 

FORTY- ONE 


only  available  for  a  very  short'  period  each  year,  while  pumped 
water  is  available  throughout  the  season.  It  is  therefore  eminently 
fair  to  use  the  same  value  per  million  gallons  per  day  for  the  sub- 
terranean water  right  as  is  developed  in  the  foregoing  for  the 
water  right  to  surface  water  from  Los  Gatos  Creek.  Applying 
$40,000  per  M.  G.  D.  to  the  developed  water  right  of  5.6  million 
gallons  per  day  for  subterranean  water,  its  value  becomes  $224,000. 
Similarly,  the  value  of  the  developed  water  right  on  Saratoga 
Creek  of  4/10  million  gallons  per  day  becomes  $16,000. 

Summing  up  the  values  of  the  various  water  rights  as  at  pres- 
ent developed,  we  have: 

Los  Gatos  Creek $213,000.00 

Saratoga  Creek  16,000.00 

Subterranean  waters  224,000.00 


Total  value  of  water  right $453,000.00 

Or,  in  round  numbers $450,000.00 

Conclusions: 

It  is  our  opinion  that  the  fair  present  value  of  all  the  prop- 
erties and  rights  of  the  San  Jose  Water  Company  is 

$ 
segregated   as   follows : 

Structures    $i,539,699-34 

Lands   493,218.25 

Rights  of  Way 24,917.00 

Development  Expense    212,100.00 

Water  Rights  (in  use) 450,000.00 

Total $2,719,934.59 

Respectfully  submitted, 

F.  C.  HERRMANN, 

G.  A.  ELLIOTT, 

Engineers. 


FORTY-TWO 


APPENDIX 


San  Jose,  Calif.,  February,   1914. 

To  the  President  and  Board  of  Directors  of  the  San  Jose  Water 
Company — 

Gentlemen : 

Herewith  accompanying  please  find  our  report  of  appraise- 
ments of  values  of  lands  and  rights  of  way  belonging  to  your  Com- 
pany, which  we  have  made  as  per  your  request. 

The  apparent  delay  in  making  our  report  was  occasioned  by 
the  unusual  storms  which  interfered  with  our  physical  examina- 
tion of  the  various  properties.  In  arriving  at  values,  in  addition 
to  the  exercise  of  our  own  judgment,  we  have  sought  information 
as  to  prices  at  which  adjoining  and  similarly  situated  lands  have 
been  sold  and  at  which  they  are  now  held  by  owners.  In  making 
these  inquiries  we  have  been  careful  not  to  state  our  object,  in 
order  that  values  obtained  might  not  be  inflated.  In  considering 
values  of  those  pieces  having  a  frontage  on  water,  we  have  ignored 
the  value  of  water  for  any  purpose  of  sale  or  commercial  use.  In 
reference  to  appraisement  of  Lots  yoA  and  706,  being  the  32  foot 
right  of  way  occupied  by  flume  of  Company,  would  suggest  that 
we  have  based  our  value  for  that  portion  within  the  Town  of  Los 
Gatos  according  to  the  values  of  adjacent  property  on  an  acreage 
basis,  and  also  on  that  portion  of  said  property  from  the  Town  of 
Los  Gatos  to  Jones  Dam,  likewise  on  an  acreage  basis. 

While  we  are  satisfied  that  to  obtain  this  right  of  way  would 
at  the  present  time  entail  a  cost  vastly  in  excess  of  the  figures  here 
given,  it  occurs  to  us  that  our  estimate  of  value  should  be  based  on 
the  land  value  rather  than  the  probable  cost  at  this  time  of  acquir- 
ing same  by  condemnation  or  otherwise. 

FORTY-THREE 


In  estimating  the  values  of  Lots  15,  17,  20,  21,  22,  26,  and  31, 
which  are  used  for  reservoir  purposes,  we  have  excluded  all  con- 
sideration of  service  value  and  have  based  our  figures  on  the  land 
values  as  compared  with  adjoining  premises. 

Referring  to  Lot  72  and  vicinity,  while  we  are  informed  that 
some  of  these  lands  were  acquired  by  the  company  at  very  extrava- 
gant prices,  in  one  instance  at  about  $3,000  per  acre,  but  probably 
justified  under  the  conditions,  we  believe  the  actual  cash  value  as 
compared  with  surrounding  tracts,  to  be  about  $300  per  acre,  and 
have  so  appraised  same. 

In  reference  to  right  of  way  "B"  at  Seven  Mile  Reservoir,  we 
have  placed  an  apparently  very  low  value  for  the  reason  that  we 
deem  this  right  of  way  not  absolutely  necessary  for  the  operation 
of  your  system  as  a  very  much  shorter  and  more  feasible  route 
could  be  obtained. 

We  have  inspected  the  various  properties  named  in  the  accom- 
panying report,  and  after  full,  fair  and  careful  consideration, 
believe  that  the  values  given  represent  a  fair  cash  value  of  same. 

After  having  completed  our  statement  of  values  we  found  it 
necessary,  upon  consideration,  to  make  some  changes,  but  owing  to 
lack  of  time  necessary  in  preparing  new  copies  of  this  report,  we 
simply  erased  former  values  and  interlined  the  new. 
Respectfully  submitted, 

(Signed)  JNO.  A.  HICKS, 
(Signed)  W.  L.  ATKINSON, 
(Signed)   EDWARD  G.  ANGELL, 

Appraisers. 


FORTY-FOUR 


APPRAISAL   OF   THE   LANDS    OF   THE    SAN   JOSE   WATER 

COMPANY, 

A s  per  Assessment  Maps. 


Lot  No.  1A— 

Williams  Reservoir  Site, 
Containing  600  acres ; 
Appraised  at  $21,000.00. 

Lot  No.  IB — 

Williams  Reservoir  Watershed, 
Containing  599.95  acres ; 
Appraised  at  $14,998.50. 

Lot  No.  10 — 

Sutro  Claim, 
Containing  42.87  acres ; 
Appraised  at  $643.05. 

Lot  No.  2 — 

McM.  and  McM.  Purchase, 
Containing  277  acres ; 
Appraised  at  $83,100.00. 

Lot  No.  3 — 

McM.  and  McM.  and  Rhodes  Pur- 
chase, 

Containing  129.71  acres; 
Appraised  at  $38,913.00. 

Lot  No.  4— 

Hartzoke  Purchase,  Hooker  Gulch, 
Containing  20  acres ; 
Appraised  at  $4,000.00. 

Lot  No.  S — 

McM.  and  McM.  and  Combatalade 

Purchase, 

Containing  0.18  acre; 
Appraised  at  $36.00. 

Lot  No.  6 — 

Combatalade  Purchase,  Hooker 

Residence  Site, 
Containing  15.11  acres; 
Appraised  at  $3,022.00. 

Lot  No.  7— 

Billie  Hooker  Purchase,  Watershed, 
Containing  161.73  acres; 
Appraised  at  $5,660.55. 


Lot  No.  8 — 

Nipher  Purchase,  Creek  above  Jones' 

Dam, 

Containing  24.04  acres; 
Appraised  at  $7,212.00. 

Lot  No.  9 — 

Jones'  Dam  Site, 
Containing  7.18  acres; 
Appraised  at  $2,154.00. 

Lot  No.   10 — 

Mouchet  Purchase,  Cavanaugh 

Gulch, 

Containing  114.60  acres; 
Appraised  at  $6,876.00. 

Lot  No.   11 — 

Simonet  Purchase,  Cavanaugh 

Gulch, 

Containing  97.32  acres ; 
Appraised  at  $4,866.00. 

Lot  No.   12— 

Baker  Purchase,  Howell  Residence 

Watershed, 

Containing  about  5  acres ; 
Appraised  at  $625.00. 

Lot  No.  13 — 

Howell  Reservoir  Site, 
Containing  31.26  acres;    , 
Appraised  at  $9,378.00. 


Lot  No. 

Baker  Purchase,  Howell  Residence 

Watershed, 
Containing  6.03  acres ; 
Appraised  at  $542.70. 

Lot  No.   15— 

Owsley  Reservoir  Site,  Kalfus  Pur- 
chase, 

Containing  106  acres ; 
Appraised  at  $12,720.00. 


FORTY-FIVE 


Lot  No. 

Lake  Ranch  Reservoir  Site, 
Containing  26.03  acres; 
Appraised  at  $5,206.00. 

Lot  No.   17 — 

Tisdale  Reservoir  Site, 
Containing  3  acres; 
Appraised  at  $4,500.00. 


Lot  No. 

Bray  Purchase,  near  Nino, 
Containing  3.693  acres; 
Appraised  at  $2,215.80. 

Lot  No.  19 — 

Roberts  Spring, 
Containing  3.70  acres ; 
Appraised  at  $2,590.00. 

Lot  No.   20 — 

Seven-Mile  Reservoir  Site, 
Containing  3.67  acres; 
Appraised  at  $1,468.00. 

Lot  No.  21— 

Cambian  Reservoir  Site, 
Containing  5  acres ; 
Appraised  at  $2,000.00. 

Lot  No.  22— 

Three-Mile  Reservoir  Site, 
Containing  7.40  acres ; 
Appraised  at  $3,700.00. 

Lot  No.  23 — 

Saratoga  Hill  Purchase, 
Containing  5.48  acres; 
Appraised  at  $3,288.00. 

Lot  No.  24 — 

News  Letter  Ranch, 

Containing  45.23  acres; 

Appraised  at  $13,569.00. 
Lot  No.  25— 

Saratoga,  Jarboe  Purchase, 

Containing  1.27  acres; 

Appraised  at  $635.00. 
Lot  No.   26 — 

Saratoga  Reservoir  Site,  Pullham 
Acre, 

Containing  i  acre; 

Appraised  at  $1,000.00. 

Lot  No.  27 — 

Coyote  Wells  Property, 
Containing  30  acres ; 
Appraised  at  $7,500.00. 


Lot  No.  28 — 

Buena  Vista  Pumping  Plant  Site, 
Containing  i  acre; 
Appraised  at  $1,200.00. 

Lot  No.  29 — 

Feeley  Purchase,  Big  Slide  of  1906, 
Containing  9.34  acres ; 
Appraised  at  $2,812.00. 

Lot  No.  30 — 

Saratoga  Dam  Site, 
Containing  0.75  acre ; 
Appraised  at  $500.00. 

Lot  No.  31 — 

Almond  Grove  Pumping  Station 

Site, 

Containing  2.11  acres; 
Appraised  at  $3,000.00. 

Lot  No.  32— 

Mt.  Spring  Reservoir  Site, 
Containing  i  .667  acres  ; 
Appraised  at  $3,300.00. 

Lot  No.  33 — 

Abandoned  Reservoir  Site,  Mt. 

Spring  Co., 

Containing  11.917  acres; 
Appraised  at  $5,550.00. 

Lot  No.  34 — 

Beckwith  Dam  Site,  Mt.  Spring  Co., 
Containing  5  acres ; 
Appraised  at  $750.00. 

Lot  No.  35 — 

Protection  Strip,  Beckwith,  Mt. 

Spring  Co., 
Containing  0.51  acre; 
Appraised  at  $75.00. 

Lot  No.  36 — 

Beckwith  Reservoir  (proposed)  Site, 
Containing  1.204  acres; 
Appraised  at  $1,000.00. 

Lot  No.  37— 

Tarbett  Wells, 
Containing  0.979  acre  > 
Appraised  at  $1,200.00. 

Lot  No.  38 — 

Massol  Well, 
Containing  0.077  acre; 
Appraised  at  $100.00. 


FORTY-SIX 


Lot  No.  39 — 

Hill  Pumping  Station  Site, 
Containing  1.07  acres; 
Appraised  at  $750.00. 

Lot  No.  40— 

Rich  Purchase,  Cavanaugh  Gulch, 
Containing  105  acres; 
Appraised  at  $15,750.00. 

Lot  No.  41— 

Riehl  Purchase,  first  of, 
Containing  3.59  acres; 
Appraised  at  $1,077.00. 

Lot  No.  42— 

McKenzie  Purchase,  Williams 

Watershed, 

Containing  151.53  acres; 
Appraised  at  $3,026.60. 

Lot  No.  43 — 

Blow  Purchase, 
Containing  7.21  acres; 
Appraised  at  $2,163.00. 

Lot  No.  44 — 

Forest  House  Property, 
Containing  74.47  acres; 
Appraised  at  $13,032.25. 

Lot  No.  45— 

Binnie  Burell  Purchase, 
Containing  282.34  acres; 
Appraised  at  $28,234.00. 

Lot  No.  46— 

Burell  42-acre  Purchase, 
Containing  42  acres; 
Appraised  at  $4,200.00. 

Lot  No.  47 — 

Riehl  Purchase,  second  of, 
Containing  18.15  acres; 
Appraised  at  $5,445.00. 

Lot  No.  48 — 

Otto  Purchase,  Hooker  Gulch, 
Containing  160  acres; 
Appraised  at  $4,000.00. 

Lot  No.  49 — 

Lyndon  Purchase,  Beardley  Gulch, 
Containing  80  acres; 
Appraised  at  $3,600.00. 


Lot  No.  50 — 

Creek  in  Los  Gatos,  McM.  and 

McM., 

Containing  10  acres,  more  or  less ; 
Appraised  at  $5,000.00. 

Lot  No.  51— 

Riecke  Purchase, 

Containing  40  acres,  more  or  less; 

Appraised  at  $12,000.00. 

Lot  No.  52— 

Sold. 

Lot  No.  53 — 

Santa  Clara  Street,  Main  Pump 

Station  Site, 
Appraised  at  $22,412.00. 

Lot  No.  54 — 

Eleventh  Street  Lot, 
Appraised  at  $2,625.00. 

Lot  No.  56 — 

Miller  Wells, 
Appraised  at  $2,000.00. 

Lot  No.  57— 

New  York  Ave.,  Los  Gatos  Lots, 
Appraised  at  $1,400.00. 

Lot  No.  58— 

New  York  Ave.,  Los  Gatos  Lots, 
Appraised  at  $1,200.00. 

Lot  No.  59 — 

Kuhn  Purchase,  Williams'  Residence 

Watershed, 
Containing  160  acres ; 
Appraised  at  $2,400.00. 

Lot  No.  BOA — 

Matty  Purchase,  Sunset  Park, 
Containing  72.83  acres; 
Appraised  at  $10,924.50. 

Lot  No.  60B — 

Matty  Purchase,  Sunset  Park, 
Containing  121.57  acres; 
Appraised  at  $15,525.00. 

Lot  No.  61 — 

Scotchler  (Losh)  Purchase,  Beard- 
ley  Gulch, 

Containing  25  acres; 
Appraised  at  $3,125.00. 


FORTY-SEVEN 


Lot  No.  62 — 

• 

Seventeenth   (i4th)   Street  Pumping 

Plant  Site, 
Appraised  at  $4,513.60. 

Lot  No.  63 — 

Adahlita,  Adha  Smith  Purchase, 
Containing  12  acres; 
Appraised  at  $3,600.00. 

Lot  No.  64 — 

Aldercroft,  Judah  Purchase, 
Containing  13.15  acres; 
Appraised  at  $3,945.00. 

Lot  No.  65 — 

Witten  Purchase, 
Containing  1.32  acres; 
Appraised  at  $396.00. 

Lot  No.  66 — 

May  Park  Lots, 
Containing  0.66  acre ; 
Appraised  at  $1,000.00. 

Lot  No.  67 — 

James  Smith  Purchase,  Williams' 

Watershed, 
Containing  160  acres; 
Appraised  at  $2,400.00. 

Lot  No.  68 — 

H.  Sund  Purchase,  Oakhill,  Los 

Gatos, 
Appraised  at  $50.00. 

Lot  No.  69A — 

J.  H.  Levy  Purchase,  Alma  Prop- 
erty, 

Containing  81.68  acres; 
Appraised  at  $16,336.00. 

Lot  No.  69B — 

J.  H.  Levy  Purchase,  Alma  Prop- 
erty, 

Containing  4.12  acres; 
Appraised  at  $1,030.00. 

Lot  No.  70A — 

Flume  Right  of  Way  in  Los  Gatos, 

Containing ; 

Appraised  at  $3,600.00. 


Lot  No.   70S — 

Flume  Right  of  Way  Out  of  Los 

Gatos, 
Appraised  at  $220.50. 

Lot  No.  71 — 

Thompson  Purchase,  Howell  Water- 
shed, 

Containing  31.28  acres; 
Appraised  at  $2,815.20. 

Lot  No.  72 — 

Lexington  School  Lot, 
Containing  i.io  acres; 
Appraised  at  $330.00. 

Lot  No.  73 — 

Idylwild  Lots, 
Containing  9.79  acres; 
Appraised  at  $2,937.00. 

Lot  No.  74 — 

Howell  Flume, 

Containing  0.216  acre,  more  or  less; 

Appraised  at  $100.00. 

Lot  No.  75 — 

River  Street  Lot, 
Appraised  at  $2,500.00. 

Lot  No.  76 — 

Lund  Purchase, 

Containing  l/2  acre,  more  or  less ; 

Appraised  at  $100.00. 

Lot  No.  77 — 

Kenny  Purchase, 
Containing  40  acres ; 
Appraised  at  $800.00. 

Lot  No.  78— 

P.  G.  &  E.  Purchase,  in  Los  Gatos, 

Containing ; 

Appraised  at  $250.00. 

Lot  No.  79 — 

P.  G.  &  E.  Purchase,  Outside  Los 

Gatos, 
Appraised  at  $3,000.00. 

Lot  No.  80 — 

P.  G.  &  E.  Purchase,  at  Alma, 
Appraised  at  $2,000.00. 


FORTY-EIGHT 


RIGHTS  OF  WAY  SAN  JOSE  SYSTEM 


i. 

Main  Pipe  Line.     Los  Gatos  to  San 
Jose. 

1.  From  Tisdale  Reservoir  to  Seven 

Mile  Reservoir. 

"A"     From  Tisdale   Reservoir  to 
line  between  P.   G.  &  E. 
and  McMurtry. 
Appraised  at  $1660.00. 
"B"     From  line  between  P.  G.  & 
E.  and  McMurtry  to  S.  J. 
W.  Co.  Lot  No.  58. 
Appraised  at  $520.50. 
"C"     From  S.  J.  W.  Co.  Lot  No. 
57  to   Seven  Mile  Reser- 
voir. 
Appraised  at  $10,160.00. 

2.  From    Seven    Mile    Reservoir    to 

Cambrian  Reservoir. 
"A"     From  Seven  Mile  Reservoir 
to    point    in    Los    Gatos 
Road. 
Appraised  at  $4344.00. 

3.  From  Cambrian  Reservoir  to  San 

Jose. 
"A"     From    Cambrian    Reservoir 

to  Casey  Road. 
Appraised  at  $477.00. 
"B"     From  Casey  Road  to  Union 
Ave.    ( San  Jose-Los  Gatos 
Road.) 

Appraised  at  $1523.00. 
"C"     From  Union  Ave.  to  John- 
ston Ave. 
Appraised  at  $1600.00. 

II. 

Adjoining  Main  Pipe  Line.   Los  Gatos 
to  San  Jose. 

i.     In  Town  of  Los  Gatos. 

"A"     From    Main    Street    to    old 
mill  of  the  P.  G.  &  E.  Co. 
Appraised  at  $100.00. 


"B"     For   future  pipe  lines  adja- 
cent to  the  old  mill. 
Appraised  at  $50.00. 
"C"     For  overflow  waters  of  Tis- 
dale     Reservoir.        From 
Reservoir  to  old  mill. 
Appraised  at  $50.00. 
2.     At  Seven  Mile  Reservoir. 

"A"     For  a  cleanout  pipe  line  for 
the  Seven  Mile  Reservoir. 
Appraised  at  $420.00. 
"B"     For   an    overflow    ditch    for 
the  Seven  Mile  Reservoir. 
Appraised  at  $571.00. 

III. 

Above  the  Town  of  Los  Gatos. 

1.  Forbes  Pipe  Line. 

"A"     From  old  mill  at  Los  Gatos 

to  Forbes  Dam. 
Appraised  at  $500.00. 

2.  Trout  Gulch  Pipe  Line. 

"A"     Across  line  of  S.  P.  R.  R. 
Appraised  at  $50.00. 

3.  Lower  Beardsley  Gulch  Pipe  Line. 
"A"     From   intake,   to   Los   Gatos 

Flume. 

Appraised  at  $500.00. 
"B"     Across  S.  P.  R.  R.  Line. 

Appraised  at  $50.00. 
"C"     For  extension  of  line  up  the 
Gulch    to   land   of    Curry 
and  Brown. 
Appraised  at  $100.00. 

4.  Lake  Ranch  Overflow. 

"A"     For   flume    and   ditch    from 
dam  at  Lake  Ranch  Res- 
ervoir. 
Appraised  at  $50.00. 

5.  Lake  Ranch  Road. 

"A"     Leading    from    Black    Road 
to  Lake  Ranch  Reservoir. 
Appraised  at  $500.00. 


FORTY-NINE 


6.     Howell  Reservoir  Road.  2.     Hill  Well  Pipe  Line. 

"A"     Leading     from     the     Bhrfk  "A"     F™m  Hil1  Well  to  line  of 

Road  to  the  Howell  Res-  A  San  Jose-Los  Gatos  Road, 

ervoir  and  beyond  to  the  „.„  £W™*«*  at  $IO7'5°- 

Black  Road  again.  3-     Hi     Well  Lane 

A       From  Hill  Well  to  San  Jose- 
Appraised  at  $300.00.  Los  Gatos  Road. 

Appraised  at  $500.00. 
4.     Upper  Beardsley  Gulch  Pipe  Line. 

LOS  GATOS  SYSTEM.  "A"     From  intake  down  Beardsley 

Gulch    to    Ousley    Reser- 
I.     Beckwith  Spring  Pipe  Line.  voir. 

"A"     From  Sta.  29  x  67  to  north-  TTnr    Appraised  at  $150.00. 

erly  line  of  S.  J.  W.  Co.      5'     Upper     ££**+     Gukh      Plpe 
Lot  No.  34.  <<A,    Across  'lands  of  j    H    Levy 

Appraised  at  $584.00.  Appraised  at  $50.00. 


FIFTY 


SUMMARY. 

Lots  1 6,  19,  20,  21,  22,  56  are  used  for  Reservoirs  or  for  pipes  for 

the  SAN  JOSE  SYSTEM. 
They  are  appraised  at  $13,973.80. 
Lots  28,  53,  62,  66,  75  are  used  for  Pumping  Stations  or  pipes  in  or 

near  the  ClTY  OF  SAN  JOSE. 
They  are  appraised  at  $31,  625.60. 
Lots  17,  31,  32,  39,  57,  58,  68,  78  are  used  for  Reservoirs,  Pumping 

Stations,  or  pipes  in  or  near  the  TOWN  OF  Los  GATOS. 
They  are  appraised  at  $14,450.00. 
Lots  33,  34,  35,  36  are  on  the  so-called  BECKWITH  WATER  SHED  to 

the  west  of  and  above  Los  Gatos. 
They  are  appraised  at  $7,375.00. 
Lots  23,  25,  26,  30  are  in  or  near  the  VILLAGE  OF  SARATOGA  and  are 

used  for  that  system. 
They  are  appraised  at  $5,423.00. 
Lots  27,  37,  38,  54  are  NON-OPERATIVE. 
They  are  appraised  at  $11,425.00. 
The  balance  of  the  Real  Estate  is  the  WATER  SHED  OF  THE  Los 

GATOS  CREEK  and  its  tributaries  and  includes  the  sites  of 

Reservoirs,  Dams,  and  the  Flume.    The  total  acreage  being 

in  excess  of  4,045.36  Acres.     (Lots  7oA  and  706  not  being 

listed  as  to  the  number  of  acres.) 
Appraised  at  $410,445.85. 

The  total  appraisement  of  the  RIGHTS  OF  WAY  is  $24,917.00. 
Total  appraisement  of  Real  Estate. $494.7 18.25 
Less  Improvements   (Lot  75) 1,500.00 

$493,218.25 

Total    appraisement   of    Rights    of 
Way    24,917.00 

$518,135.25 

NOTE.  With  one  exception,  no  value  for  improvements  was  listed 
by  the  Real  Estate  appraisers.  The  one  exception  being 
Lot  #75,  where  the  appraisement  was: 

Real   Estate    $i ,000.00 

Improvements    1,500.00 

$2,500.00 

FIFTY-ONE 


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